It’s one thing to lose the equity in a financial institution, if you’re the person who invested in the equity. It’s a different thing if you’re the debt, because what happens, debt only gets its money back with a coupon. And if you invest in a financial institution, which is impossible for any outsider to analyze, and you lose your money, you only have to do that once and you won’t do that again, because the rate of return isn’t big enough.

So his two main arguments appear to be:

1) financial institutions are impossible for any outsider to analyze

2) returns on financial-institution debt were/are so low that those who bought it can’t really be expected to shoulder any risk

I believe No. 1, but that of course raises the question of why creditors were willing to pump money into impossible-to-analyze institutions for low returns, and whether we really want to encourage that kind of behavior.